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APN Outdoor's (ASX:APO) battle for billboard advertiser Adshel is over as oOh!media (ASX:OML) looks poised to snare the prized asset following a $570 million cash bid.
The latest offer gazumps APN's revised cash and scrip offer for Adshel announced last Friday, which valued the business at $540 million.
It's also $100 million higher than the original bid by oOh! for Adshel in April.
The surprise move by oOh! has sharply boosted the share price of Adshel's owner Here There & Everywhere (ASX:HT1), pushing the stock up more than 7 per cent in early trading.
However, APN has been placed in a trading halt as the company now prepares to deliberate on an unsolicited $1.1 billion takeover offer of its own received late last week from French billboard giant JCDecaux.
Shares in oOh!media have also been placed in a trading halt as the Aussie billboard advertiser finalises a $329.9 million institutional capital raising to help fund the acquisition of Adshel.
The company is undertaking a one-for-2.3 non-renounceable entitlement offer that is fully underwritten.
It has also secured a new $450 million debt facility to refinance existing debt, to supplement acquisition costs and to provide working capital. The acquisition will increase company debt by $259.8 million.
Brendon Cook, the CEO of oOh!media, says his company has a history of developing 'a diverse product portfolio to offer advertisers a range of audiences'. He also says the Adshel acquisition will leverage off its existing business to deliver low double-digit earnings growth in calendar 2018.
"Adshel is complementary to our existing portfolio and we are excited to be entering the new segments of street furniture and rail," says Cook.
"The digitisation opportunity in the Adshel business is expected to provide a significant avenue for further growth beyond what has been achieved to date. We are confident that oOh! shareholders will enjoy the benefit of cost synergies arising from the acquisition."
The acquisition is priced at a multiple of 11.6 times EBITDA, although oOh! says this will pull back to 8.7 times through cost synergies achieved after settlement. These are estimated at between $15 million and $18 million.
HT&E chairman Peter Cosgrove has described the Adshel sale as a 'good result' for shareholders and paves the way for the company to focus growth on the group's national radio network.
"A competitive sale process has delivered the best outcome for shareholders, lifting the offer for Adshel by more than $100 million from the initial unsolicited approach in April this year, securing for HT&E shareholders a share of synergies likely to be achieved by oOh!media," says Cosgrove.
"The sale proceeds will allow HT&E, amongst other things, to strengthen its balance sheet via the paydown of existing debt.
"Shareholders will also benefit via a capital return to be conducted by way of an on-market share buyback and a fully franked special dividend once the sale of Adshel completes."
The bid by oOh!media is subject to approval by competition regulators in both Australia and New Zealand, although the market is not factoring this as a barrier to the deal proceeding.
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